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Brazil's Itaú to Acquire 49.9% of Brokerage XP for $1.9 Billion

SÃO PAULO -- Brazilian bank Itaú Unibanco Holding SA has agreed to pay more than 6 billion reais ($1.9 billion) to buy a 49.9% stake in local brokerage firm XP Investimentos SA, along with options to acquire full control in the future.

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Itaú is set to pay 5.7 billion reais to XP's shareholders General Atlantic and Dyna III fund for their stakes in XP, the bank said late Thursday in a regulatory filing. It also agreed to make a capital injection of 600 million reais.

Itaú said it would buy additional stakes in 2020 and 2022, which will give the lender 74.9% of XP's total capital, and 49.9% of the broker's voting shares.

The deal also includes options that could allow Itaú to take full control of the Brazilian brokerage as early as 2024.

The transaction, Itaú said, values XP at about 12 billion reais, which is equal to 20 times the broker's estimated price-earnings ratio.

XP is present in 130 Brazilian cities in 24 states, as well as in New York, Miami, London and Geneva. It has 850 employees, 2,000 independent agents, and 410,000 clients. It holds 85 billion reais in assets under custody and 12 billion reais in assets under management.

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XP's main businesses are security brokerage, distribution of investment products and asset management, according to Itaú.